Take-a-Break Travel Company offers spring break travel packages to college students. Two of its packages, a 7-day, 6-night trip to Cancun and a 5-day, 4-night trip to Jamaica, have the following characteristics: Package Specifications Oceanfront room; number of nights Meals: Breakfasts Lunches Dinners Scuba diving trips Water skiing trips Airfare (round trip from Miami) Transportation to and from airport Cancun Jamaica 6 4 Cost Data $63/night 6 $11/ea 7 5 $16/ea 6 4 $26/ea 3 2 $82/ea 4 2 $57/ea 1 1 $330 (Cancun), $500 (Jamaica) 1 1 $35 (Cancun), $54 (Jamaica) The Cancun trip sells for $1,880, and the Jamaica trip sells for $1,640, and both packages allow two bags to be checked for free. Required: 1. What are the current profit margins on both trips? 2. Take-a-Break's management believes that it must drop the price of each trip by $107 in order to remain competitive in the market. Recalculate profit margins for both packages at these price levels.

Take-a-Break Travel Company offers spring break travel packages to college students. Two of its packages, a 7-day, 6-night trip to Cancun and a 5-day, 4-night trip to Jamaica, have the following characteristics: Package Specifications Oceanfront room; number of nights Meals: Breakfasts Lunches Dinners Scuba diving trips Water skiing trips Airfare (round trip from Miami) Transportation to and from airport Cancun Jamaica 6 4 Cost Data $63/night 6 $11/ea 7 5 $16/ea 6 4 $26/ea 3 2 $82/ea 4 2 $57/ea 1 1 $330 (Cancun), $500 (Jamaica) 1 1 $35 (Cancun), $54 (Jamaica) The Cancun trip sells for $1,880, and the Jamaica trip sells for $1,640, and both packages allow two bags to be checked for free. Required: 1. What are the current profit margins on both trips? 2. Take-a-Break's management believes that it must drop the price of each trip by $107 in order to remain competitive in the market. Recalculate profit margins for both packages at these price levels.

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter25: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 5TIF: Accepting service business at a special price If you are not familiar with Priceline.com Inc....

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